This entry was posted on Sunday, August 12th, 2007 at 9:27 am and is filed under Mortgage Rates. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Sacramento Mortgage Rate Update: Repricing Risk
While the sub prime mess spreads into the international arena and investors reevaluate risk and pricing on many of today’s loan programs, there is a silver lining.
The rates on traditional 30 and 15 year fixed rate mortgages have been gradually falling. We ended the week just a smidge over 6.5% with a half a point on the 30 year; a little lower on the 15 year. If you’re someone who doesn’t need “creative” financing, this is good news.
This decline resulted from a flight to quality as money fled stocks for the safe haven of bonds and because the Fed Funds futures market is now pricing in a 100% expectation of a Fed rate cut in September.
Even if the Fed cuts short term rates, the 30 year may not drop further. Yield spreads–the difference in rate between short and long-term bonds–is widening as demand for the high-yield junk type bonds and MBSs wanes.